There has been some recent press about HM Revenue and Customs overtaxing some people and undertaxing others.
As often happens with the media, this is more about sound bites and less about substance. The context of these errors must also be considered.
For taxpayers who have most of their income taxed at source, such as under PAYE, the Tax Code is designed to take the right amount of tax. However it is necessarily based on what the taxman knows, which is generally based on the previous year. If a taxpayer’s circumstances change, then the taxman may not know, so the amount of tax deducted at source may be wrong, and result in an over- or under-payment.
This happens all the time. If a Tax Return is submitted at the end of the year, it is sorted out quite normally, and very often the tax under- or over-collection is dealt with through an adjustment to the tax code the following year. It is self-righting. The media can make a big deal of this, but it has happened from time immemorial, and will continue to happen. There is no practical alternative.
Does this sound like we are defending the taxman? No! Outside this scenario, there are many occasions when miscalculations have been made and not corrected. The legislation isn’t helpful to the taxpayer in this respect, as often it is up to the taxpayer to make a claim or request, and unless their accountant is on the ball, this will not be done. It is these circumstances where the criticism of HM Revenue and Customs is justified.
However whilst HMRC staff may on occasions be willing, the reality is that the reduction in staff numbers make it very difficult to give the service that we as taxpayers would like. The anomymisation of the process does not help either, when the taxpayer or their accountant finds it very difficult to speak to someone with first hand knowledge of a particular case.
There has been close working between the professional bodies and HMRC over recent months, and a joint statement has been issued. HMRC is attempting to “understand” the problems faced by taxpayers and accountants – but we all very much look forward to seeing in practice how the problems are going to be addressed.
Much like everything in this world, it is the little simple things that cause the most grief and concern. Having someone on the end of the phone sounding like they care about your affairs would be a big, big start.